LAW OF CONTRACT - Coursework

Problem Question
Ryan v. IndyBooks Ltd.
Lily Ryan (63) has run an antiquarian bookshop in rural Kent for 30 years. Although the books she sells are extremely valuable, she is hampered by her rural location. If she was entirely reliant on customers coming into her shop, she would make very few sales, and her business could not survive. In June of 2011, Lily’s daughter Sarah told her about the website . The website allows customers to browse the stock of hundreds of member booksellers from one online catalogue, and to order books from them online. Member booksellers enter the details of books for sale into the website’s catalogue, maintain an online profile page, set prices and postage rates and receive customers’ orders by email. The American company behind the website - IndyBook Ltd – processes customers’ payments and transfers them to member booksellers’ bank accounts at the end of every month, levying a 10% commission on the total sales at the point of transfer. Members also pay a monthly membership fee of £15 by credit card. Lily was reluctant to use the website, as she does not enjoy using computers. However, at Sarah’s urging, she decided to explore it further.

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On June 15, 2011, Lily clicked on a link titled “Sell With Us” on the website’s homepage. She was brought to a page which explained that the website was a tool for increasing small booksellers’ sales – in particular by regularly highlighting individual booksellers’ profiles on the homepage, and by including their products in ‘special feature’ articles which review important developments in the literary and bookselling worlds. This page directed Lily to set up a profile for her shop. This process required her to fill in a “contact details” form and a “payment details” form, and to provide her VAT registration number. At the bottom of the page was a button titled ‘Submit’. Above the button was a line of text; “Yes I agree to the IndyBook Terms and Conditions”, with a check-box next to it. The website was designed so that it was not possible to click the ‘Submit’ button without first clicking on the check-box. Had Lily chosen to, she could have searched for these Terms and Conditions, which were displayed on another page of the website. Instead, she clicked on the check-box, clicked the ‘Submit’ button, and was brought to a page which simply read “Congratulations. Welcome to the IndyBook Team”. At almost exactly the same time Lily received an email from [email protected] confirming her membership. This email contained a direct hyperlink to the Terms and Conditions page. Lily did not read the email, as it had been automatically directed to her email account’s Spam folder.

Lily was impressed that the entire registration process took only 4 minutes. Sarah helped her to enter several books into the catalogue immediately, and her first successful sale was processed at midday the following day. She remained a member of the website for a year, becoming more comfortable with the site, and frequently using it to sell her books to customers based in Europe, North America and China.

However, by mid-2012 Lily was unhappy with the service. The website was frequently down for unscheduled maintenance – for periods of up to three hours almost every other week. Lily knew from correspondence with customers who had been unable to purchase her books for this reason that she had certainly lost lucrative sales. In addition, her shop profile had never been featured on the website’s frontpage. She sent several emails to the website’s customer care email address but received no reply. On April 15 2012, a frustrated Lily cancelled her credit card in order to withhold her membership fee. On April 30, Lily received an email from IndyBooks, informing her that – in accordance with the website’s Terms and Conditions - her account had been suspended for failure to pay the membership fee, and that her sales income for the month would be withheld until that fee was paid.

After several months of protracted correspondence, Lily commenced proceedings against IndyBooks for breach of contract. She obtained summary judgment in default for a sum to be determined by the court. Before further directions could be given, IndyBooks applied for proceedings to be stayed under s.9 of the Arbitration Act on the basis that its contract with Lily contained a binding arbitration clause. It relied on Clause 13 of the indybook.co.uk Terms and Conditions which read:

“Any dispute or claim arising from this Agreement shall be submitted to mediation in Texas, USA and failing a satisfactory result from mediation a continuing dispute shall be settled by binding arbitration in the same location.”

Raffles J. in the High Court refused to stay the proceedings on the basis that:

Lily first received notice of the Terms and Conditions by email after the contract had been formed.

Lily’s clicking “I agree to the Terms and Conditions” was insufficient to incorporate the Terms and Conditions into her contract with Indybooks. Raffles J. said: “To hold otherwise would be an abuse of the doctrine of incorporation. The courts have always policed standard form contracting carefully. The impersonal, speedy, casual nature of online contracting gives cause for grave concern. No company in IndyBooks’ position could reasonably assume that Ms. Ryan consented to its standard terms; particularly this wide-ranging and unexpected arbitration clause, which purports to strip her of her right of access to the courts of this jurisdiction. At the very least, Clause 13 should have been directly presented to Ms. Ryan at the point of clicking in a format which made its consequences clear. Nothing less would have sufficed to incorporate this clause into the contract between these parties.”

You are counsel for IndyBooks Ltd. Advise them on their likelihood of success on appeal.

Advice on answering this question:

You will be rewarded for incorporating relevant case-law into your answer which has not already been presented to you in the course of lectures or seminars. You should pay special attention to case-law on online contracting. Given the paucity of relevant case law in England and Wales, you may wish to make reference to case law from other common law jurisdictions. In sourcing this case law, you should pay attention to reports, books and journal articles as well as to case law in databases.

Before completing your answer, you should review the guidance on answering problem questions, which is available on the Welcome Page and Law Student Guide on Moodle.

If you have any difficulties with any aspect of the question, please post them to the FAQ Forum on Moodle instead of emailing course staff.

OR Essay Question

Here are three heavily summarized accounts of cases in which government contracts with private security companies have come into conflict with fundamental human rights:

Youth Justice: In 1994, legislation was passed which established four Secure Training Centres to accommodate vulnerable teenagers who had been sentenced to custody or remanded in custody by a court. The Centres are based in four English towns, including Chatham, and each is operated by a private company under contracts managed by the Youth Justice Board on behalf of the Secretary of State for Justice. Three of the Centres are run by G4S. These contracts set out the detailed operational requirements with which each Centre is expected to conform. Each contract provides that teenagers detained at the Centres (called ‘trainees’) must not be subject to physical restraint except ‘as a last resort when no alternative is available and only to prevent him/her from escaping or from harming him/herself or others or from damaging property, or to prevent him/herself from inciting another trainee to harm him/herself or others or to damage property’. The Youth Justice Board has a statutory responsibility to monitor the Centres. It has emerged that staff at the Centres were routinely and unlawfully using physical force to ensure trainees’ compliance with day-to-day orders, even where their disobedience did not pose any risk to security or safety. None of the children detained in the Centres complained of maltreatment. In 2004, two boys – Adam Rickwood and Gareth Wyatt - died in Secure Training Centres in circumstances connected to staff use of physical restraint. G4S continues to run 6 of the 14 privately-run prisons in the country. The Howard League for Penal Reform has repeatedly expressed concern about conditions in these prisons.

Deportation: In October 2010, Jimmy Mubenga died while he was being physically restrained by Detainee Custody Officers employed by G4S on board a British Airways flight. In July 2013, the jury at his inquest found that he had been unlawfully killed. The officers were part of an ‘overseas escort team’ deporting him to Angola. Private companies started providing this service in 1994 and G4S held an overseas escort contract with the UK Border Agency. According to Medical Justice UK, Amnesty International and an independent inquiry by Baroness Nuala O’Loan, there have been hundreds of reported incidents in which deportees have been subjected to unreasonable force by escort teams. In November 2010, the Home Affairs Select Committee expressed concern that the UK Border Agency was not adequately supervising its contractors’ use of force. The Agency says that its contracts required G4S to ensure that its employees did not use unlawful force in the performance of their duties. However, the Agency will not release un-redacted copies of its contracts with escort providers, citing security concerns. The Agency has not renewed its contract with G4S. G4S was replaced in this role by Tascor in 2011. In a July 2013 submission to the UK Border Agency’s Independent Advisory Panel on Non-Compliance Management, Medical Justice UK documented multiple flaws in the Home Office’s oversight of private contractors and argued that private companies are insufficiently accountable to the Home Office.

Asylum Seeker Housing: In March 2012, G4S successfully tendered for lucrative new ‘COMPASS’ contracts from the UKBA to provide housing for ‘dispersed’ asylum seekers. G4S took over asylum housing provision from social landlords, including councils. G4S had no previous experience of providing social housing. It used subcontractors such as Jomast and Cascade to find private landlords. United Property Management and the charity Migrant Help were G4S’ original sub-contractors in Yorkshire and the Humberside. In June, G4S terminated its contract with United Property Management. It then struggled for a time to meet its contractual obligations to find a sufficient supply of housing using new sub-contractors. The Home Office required weekly reports from G4S in an effort to monitor compliance. In January 2013, a parliamentary inquiry into asylum support for children and young people heard that the housing and pastoral care provided to families by G4S subcontractors is often inadequate. In a February 2013, in a report compiled for the Independent Chief Inspector of Borders and Immigration, the lobby group SYMAAG claimed that families have been moved from one home to the next at short notice, and have been evicted by private landlords when G4S’ subcontractors have failed to pay their rent. Those who complain about their housing conditions are often subject to intimidation. The womens’ rights NGO Kazuri argues that G4S are in breach of multiple terms of the COMPASS contract, with particular consequences for women. The Joseph Rowntree Foundation has roundly criticized the COMPASS contracting framework as inadequate.

What, if anything, should Government do to remedy the defects in its contracts with the public services industry, and to better manage the risk that service providers will not perform their contracts to the appropriate standards?

Advice on answering the question:

You must demonstrate that you have read and understood at least three journal articles from the course electronic reading list. Theoretical articles will help most. While these articles tend not to directly address this type of contract, the fundamental concepts discussed will provide you with a toolkit for constructing your argument. You can demonstrate your understanding by referencing, by quotation where appropriate, and by your use of the articles’ arguments to inform your own. You may, of course, conduct additional reading within and outside the reading list and incorporate it into your essay.

To help with your factual research, a specific reading list, comprising largely of reports and documents referred to in the examples above is provided at the end of the electronic reading list. You should read them to flesh out the summaries given above. They discuss contractual issues in detail and you will find them very useful. They do not count towards your three articles. You should use and reference them as normal. The reading list also includes articles by academics working in disciplines other than law, which you may find helpful in constructing your analysis.

Your answer need not range across the whole of the public services industry. You are welcome to focus on one area of practice and may find that doing so enables you to create a more effective and focused argument. You are also welcome to discuss examples which are not referred to above – this ‘story’ may develop further between September and December.

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